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AICPA CPA-Business Exam Questions
CPA Business Environment and Concepts (Page 16 )

Updated On: 28-Feb-2026
Page 16 of 107
PDF with 530 Questions

Under the Revised Model Business Corporation Act, which of the following must be contained in a corporation's articles of incorporation?

  1. Quorum voting requirements.
  2. Names of stockholders.
  3. Provisions for issuance of par and nonpar shares.
  4. The number of shares the corporation is authorized to issue.

Answer(s): D

Explanation:

Choice "d" is correct. The articles must set out the corporation's authorized shares. Choice "a" is incorrect. Quorum requirements, if stated at all, usually are in the bylaws; they need not be included in the articles of incorporation.
Choice "b" is incorrect. The articles need not include the names of stockholders.

Choice "c" is incorrect. The RMBCA has eliminated the concept of par value and so does not have a requirement that par value be established in the articles.



Under the Revised Model Business Corporation Act, a merger of two public corporations usually requires all of the following, except:

  1. A formal plan of merger.
  2. An affirmative vote by the holders of a majority of each corporation's voting shares.
  3. Receipt of voting stock by all stockholders of the original corporations.
  4. Approval by the board of directors of each corporation.

Answer(s): C

Explanation:

Choice "c" is correct. A merger can be effected by giving some parties cash or property; not everyone need receive voting shares.
Choice "a" is incorrect. The merger must be pursuant to a formal plan. Choice "b" is incorrect. The majority of each corporation generally must approve a merger. Choice "d" is incorrect. A plan of merger must be approved by the boards of the merging corporations.



Which of the following provisions must a for-profit corporation include in its articles of incorporation to obtain a corporate charter?

I). Provision for the authorization of voting stock.
II). Name of the corporation.

  1. I only.
  2. II only.
  3. Both I and II.
  4. Neither I nor II.

Answer(s): C

Explanation:

Choice "c" is correct. Both I and II.
Rule: In order to obtain a corporate charter, a for-profit corporation must include in its articles of incorporation the name of the corporation and a provision for the authorization of voting stock. In addition, the articles of incorporation must include the names of the incorporators and the name and address of the registered agent.
Choices "a", "b", and "d" are incorrect, per the above rule.



The corporate veil is most likely to be pierced and the shareholders held personally liable if:

  1. The corporation has elected S corporation status under the Internal Revenue Code.
  2. The shareholders have commingled their personal funds with those of the corporation.
  3. An ultra vires act has been committed.
  4. A partnership incorporates its business solely to limit the liability of its partners.

Answer(s): B

Explanation:

Choice "b" is correct. Generally, a corporation is treated as an entity distinct from its shareholders and shareholders are not liable for the corporation's debts. However, where the shareholders do not treat the corporation as a distinct entity, such as where they commingle their personal funds with the corporation's funds, courts are likely to ignore the corporate form as well. Choice "a" is incorrect. An election to be taxed like a partnership under Subchapter S is not grounds to pierce the corporate veil.
Choice "c" is incorrect. An ultra vires act is one beyond the corporation's powers. The persons who authorized the ultra vires act can be held personally liable for damages caused, but it is not a ground for piercing the corporate veil.
Choice "d" is incorrect. Limiting personal liability is the main reason to incorporate. It is a ground for piercing the corporate veil only if it is done fraudulently (i.e., to avoid paying present creditors).



Generally, a corporation's articles of incorporation must include all of the following, except the:

  1. Name of the corporation's registered agent.
  2. Name of each incorporator.
  3. Number of authorized shares.
  4. Quorum requirements.

Answer(s): D

Explanation:

Choice "d" is correct. A corporation's articles of incorporation need not contain any information regarding quorum requirements.
Choices "a", "b", and "c" are incorrect because under the Revised Model Business Corporations Act a corporation's articles of incorporation must include:
(1) The name of the corporation,
(2) The name and address of the corporation's registered agent, (3) The names and addresses of each of the incorporators, and (4) The number of shares authorized to be issued.



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